Amazon Marketplace doesn’t do Sales Tax

If you sell products online for your home-based business, chances are you have looked to branch out to other channels on the web. It’s always a good idea to use as many channels as possible when selling products online – as long as you can turn a profit.

The Amazon Marketplace is one sales channel where small businesses / home-based businesses can go to sell their products. Amazon Marketplace vendors are shown alongside products usually under the “New and Used” link or they may show up as featured merchants alongside the product itself. The second option is preferable, although both will tap into Amazon’s very substantial traffic. Therefore the Amazon Marketplace is something to consider.

One caveat: they don’t do sales tax! I’ve been selling on Amazon Marketplace for years now and this has always been a major complaint of mine. Since I first started selling on Amazon Marketplace, the merchant interface has evolved into something with some pretty nice features, but still no sales tax table.

Amazon Marketplace merchants are expected to absorb the sales tax into shipping. That might work for some merchants, but not us. Under current tax rules (in our case), we have to charge our county’s sales tax rate to anyone in our state who buys something from us. That means 8.9% and that is a percentage we just can’t ‘absorb’ into the profit or shipping charges. What ends up happening is that I just cancel Amazon orders for people in my state (Washington) because of that margin cut.

I have tried on numerous occasions to explain this issue to Amazon merchant support, but my complaints fall on deaf ears. The last time I called about this, I was told that only businesses the size of Target or Best Buy get tax tables with their merchant system!

Amazon really should get with it here. As I mentioned in a previous blog post (link here), U.S. internet sales tax is coming and it’s coming soon. Amazon Marketplace will need to work on integrating sales tax if they want to be a ‘real marketplace’.